Competitive market, rates not to be excessive, inadequate, unfairly discriminatory
In a competitive insurance market, companies have to set prices that are fair — not too high, not too low, and not unfair to certain groups. Prices are too high if the company makes way too much profit or spends too much on overhead. Prices are too low if they can't cover expected losses and costs, and keeping them that way could lead to one company taking over the whole market. Prices are unfair if they don't reflect real differences in risk and costs between customers.
287.950. , rates not to be excessive, , . — 1. Rates in a competitive market shall not be excessive, inadequate or unfairly discriminatory. Rates are excessive if it is likely to produce a long- profit that is unreasonably high for the insurance provided or if expenses are unreasonably high in relation to services rendered. Rates are not inadequate unless clearly insufficient to projected losses and expenses and the use of such rates, if continued, will tend to create a in the market. A rate is inadequate if funds equal to the full ultimate cost of anticipated losses and are not produced when the are applied to anticipated payrolls.
2. Unfair discrimination exists if, after allowing for practical limitations, price fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different result for with like but different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.
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Source & history notes
(L. 1993 S.B. 251 § 25) Effective 1-01-94
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